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Portland Poised for Hotel Room Boom
02/15/2013   Reported By: Tom Porter

The number of hotel rooms in Maine's largest city is set to expand dramatically next year. While some regard this as a sign of Portland's resurging economy, there's also concern in the industry that the hotel market could be oversaturated - at least for the short-term.  Tom Porter has more.

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Portland Poised for Hotel Room Boom
Originally Aired: 2/15/2013 5:30 PM

ground breaking 2

A recent groundbreaking ceremony in downtown Portland (above) marks the latest development in the growth of the Portland hotel market.  By May next year, this stretch of ground at the corner of Fore Street and Union Street - which has served mainly as a parking lot since the 1970s - is expected to accommodate a seven-story, 130-room hotel.

Portland mayor Michael Brennan says more than 8.4 million visitors come to Portland every year.. "So between the jetport, trains, cruise ships, driving - 8.4 million people. So some people say, 'Do we need another hotel in Portland?' And I say, 'Yes we do.'"

"There's a huge demand for people coming into Portland, both to live -residential - and to visit," says Tim Soley, president of East Brown Cow, the development company behind the new Hyatt Place hotel.

He says visits among hotels and restaurants on Portland's peninsula doubled between 2006 and 2012 - despite the recession that hit midway. And this means a shortage of downtown hotel rooms.  "It's at this point extremely obvious for anybody in the industry that the demand exists," Soley says.

"Well it's wonderful to have new hotels being built in the Portland area, but there is a level of concern about, are we going to need a lot more 'heads in beds?' if you will," says Barbara Whitten, president of the Greater Portland Convention and Visitors Bureau.

Filling extra hotel rooms, she says, is not a problem during the busy summer months. The problem arises in staying afloat during the off-season. It's not so much as question of "build it and they will come," she says, as "build it, and then do everything you can to make them come."

"There's got to be a concerted effort to bring as many people as we can here," Whitten says.

A lot of new hotel rooms are on the way to Portland next year. Apart from Hyatt Place, three more establishments are due to come onto the market. Marriott is opening a Courtyard Inn - also in the Old Port area - which will be about the same size as the new Hyatt. A smaller so-called boutique hotel is coming to the old Portland Press Herald building on Congress Street. And the historic Eastland Park Hotel - which is currently undergoing a $40 million renovation and expansion - will re-open next Spring as The Westin Portland Harborview.

In all, says Greg Dugal, this means about 400 extra rooms will be available next year. Downtown Portland alone will have some 2,600 rooms, while the wider metropolitan area will boast nearly 4,000. Dugal is executive director of the Maine Innkeepers Association.

"Hotel markets are resilient, they tend to be able to absorb rooms," Dugal says. "It just generally becomes a matter of, how long does it take for them to become absorbed?"

Dugal says the magic number for hotels is 60 percent - that's the occupancy rate generally required for a business to break even, and that's been about the level that Portland's hotels have been at for some time now. The question is, will the city's innkeepers be able to maintain this average occupancy rate year-round once the new hotels are here?

I think there's as much upside here as potential downside, but I think it's going to take a little while to shake it all out, to be honest with you," Dugal says.

"It will impact all of us," says Gerard Kiladjian, general manager of the Portland Harbor Hotel, a 101-room establishment located just yards from the site of the planned Hyatt Place hotel. "We will see a downtick in our occupancies, but hopefully, we're all going to go out and market Portland a lot better, and push for more tourists and more businesses and more conventions, and hopefully be successful at the end of the day."

But in the meantime Kiladjian says he expects things to be a little tougher for the next two or three years.

Photo by Samantha Fields. 

Samantha Fields contributed reporting to this story.



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